Microeconomics

If the supply curve is perfectly inelastic and the demand curve is a d

If the supply curve is perfectly inelastic and the demand curve is a downward sloping straight line, what is the effect of a consumer ad valorem tax on equilibrium price and quantity? A) Price remains unchanged and quantity increases. B) Price decreases and quantity increases. C) Price decreases and quantity remains unchanged. D) Price and […]

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Date: September 9th, 2020

The elasticity of supply of rental units in New York City is estimated

The elasticity of supply of rental units in New York City is estimated to be about 0.10. Current price restrictions (price floors) are estimated to decrease the price of rental units by 10% below equilibrium price. By how much would price and quantity supplied change if the price floors were removed from the rental unit […]

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Date: September 9th, 2020

Relative to the short-run demand for gasoline, the long-run demand for

Relative to the short-run demand for gasoline, the long-run demand for gasoline is A) probably more elastic since people need time to change automobiles and driving habits. B) probably less elastic since people need time to change automobiles and driving habits. C) probably more elastic because people can hoard this good. D) probably less elastic […]

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Date: September 9th, 2020

Some environmental groups are on record suggesting that the price of g

Some environmental groups are on record suggesting that the price of gasoline should be much higher than it was in the early 1990s. Why might they say this? A) They own stock in oil companies. B) They anticipate that the longer the price is high, the more elastic the response by consumers will be. C) […]

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Date: September 9th, 2020

Electricity accounts for almost 20% of the cost of making steel. A 10%

Electricity accounts for almost 20% of the cost of making steel. A 10% increase in electricity prices results in steel firms decreasing production and thereby demanding 5% less electricity. Over many years, technological innovations can change the way steel firms make steel and reduce the industry’s energy requirements. This suggests that the steel industry’s short-run […]

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Date: September 9th, 2020